June 9, 2022
Tax Pros’ Biggest Gripe This Year? The IRS - Jonathan Curry, Tax Notes:
Frustrating interactions with the IRS topped the list of challenges faced by sole proprietors and accounting firms with 10 or fewer employees, beating out other difficulties such as finding qualified staff and keeping pace with complex and ever-shifting tax law changes, according to the results of a survey conducted by the American Institute of CPAs and Chartered Institute of Management Accountants.
[AICPA President Barry} Melancon also singled out the delays that tax professionals face in obtaining permission to contact the IRS on behalf of clients just to have simple requests answered. “The complexity and the administration just is an untenable element,” he said.
So it's not just me.
Yellen Says Grantor Trust Guidance Coming Soon - Doug Sword, Tax Notes ($):
Treasury Secretary Janet Yellen said her department is working on guidance regarding grantor trusts, adding that the results would come out soon.
At the wide-ranging hearing that lasted nearly three hours, Yellen defended the administration’s negotiation of a global tax deal and the March 2021 passage of the $1.9 trillion American Rescue Plan Act that many Republicans blame for at least a component of inflation’s surge. Asked for updates on federal investigations into how the nonprofit news outlet ProPublica obtained what it called a trove of private tax information of wealthy Americans, Yellen said she wouldn’t interfere in the work of the FBI and other investigators.
Related: Potential Significant Changes to Estate Plan & Gift Tax Rules May Be on the Horizon.
Yellen Says Global Deal Would Relieve Worker Tax Burden - Asha Glover, Law360 Tax Authority ($):
All but a handful of countries in the OECD's inclusive framework of 141 jurisdictions agreed to the global tax overhaul in October, which included the 15% minimum tax rules under Pillar Two for large multinational corporations and a reallocation of taxing rights on highly profitable companies under Pillar One.
"For the United States, this will level the playing field," Yellen said, noting that the U.S. is the only country in the world to currently impose a minimum tax on the foreign income of multinational corporations. "Our competitors have no such tax, and they will move from 0 to 15%."
IRS Cracking Down on Related-Party Basis Shifting - Kristen Parillo, Tax Notes ($).\:
The IRS is pursuing several cases involving billions of dollars in lost revenue from basis-shifting transactions between related-party partners and will aggressively address the abuse, according to an agency attorney.
“We’re going to throw everything we have at it. We can’t just ignore it,” said Clifford Warren of the IRS Office of Associate Chief Counsel (Passthroughs and Special Industries).
Dirty Dozen: Scammers use every trick in their communication arsenal to steal your identity, personal financial information, money and more - IRS:
Text message scams: These scams are sent to taxpayers' smartphones and can reference things like COVID-19 and/or "stimulus payments." These messages often contain bogus links claiming to be IRS websites or other online tools. Other than IRS Secure Access, the IRS does not use text messages to discuss personal tax issues, such as those involving bills or refunds. The IRS also will not send taxpayers messages via social media platforms.
Email phishing scams: The IRS does not initiate contact with taxpayers by email to request personal or financial information. The IRS initiates most contacts through regular mail. If a taxpayer receives an unsolicited fraudulent email that appears to be from either the IRS or a program closely linked to the IRS, report it by sending the email as an attachment to firstname.lastname@example.org. The Report Phishing and Online Scams page at IRS.gov provides complete details.
Phone scams: The IRS does not leave pre-recorded, urgent or threatening messages. In many variations of the phone scam, victims are told if they do not call back, a warrant will be issued for their arrest. Other verbal threats include law-enforcement agency intervention, deportation or revocation of licenses.
Elderly taxpayers are frequently victims of these scams, so pass these tips on to family members who might be vulnerable.
Atty's Lot Sales Ineligible For $1M Ordinary Loss - Emlyn Cameron, Law360 Tax Authority ($):
A personal injury attorney and his wife can't take an ordinary loss of more than $1 million for 2012 on the sale of four lots because the lots were the wrong kind of asset, the U.S. Tax Court ruled Wednesday.
The court said the bulk of the factors it reviewed, including that his primary work was not real estate development and sales, weighed against finding the lots were... stock-in-trade, inventory or property for sale as part of his normal business.
Link to case: T.C. Memo. 2022-57.
Incentivizing Energy Efficiency: How 179D Provides Significant Tax Savings - Joe Sawatske, Eide Bailly: 2022/6 "Here’s how the Eide Bailly Energy Incentives Team has helped them realize a $26,000,000 tax deduction."
Trump Organization Official Bolsters Legal Team Ahead of Tax-Fraud Trial - Corinne Ramey, Wall Street Journal ($). "Mr. Weisselberg and the Trump Organization were indicted last summer on tax-fraud charges for what prosecutors have alleged was a 15-year scheme to evade taxes on company benefits to employees such as school tuition, car leases and apartments. Mr. Weisselberg and the company have pleaded not guilty and asked a judge to dismiss the charges."
What Freelancers Need to Know About Income, Deductions, and Taxes - Kelly Phillips Erb, Bloomberg. "There’s a persistent rumor that you only have to report individual payments of $600 or more on your tax return. I suspect that’s related to the Form 1099-NEC (formerly Form 1099-MISC for non-employee compensation) reporting threshold. But you must report all income received from your freelance work on your tax return, even if you do not receive a corroborative form from the payer."
5 tax considerations for young workers and their parents - Kay Bell, Don't Mess With Taxes. "A Roth IRA usually is the best option for young workers. The after-tax contributions, even if the youngster didn't make enough to owe taxes, will grow tax-free for decades. The maximum contribution amount for 2022 is $6,000 or as much as the young worker earned."
Apply for a rewarding career with Taxpayer Advocate Service. You too can make a meaningful impact on peoples’ lives every day. - Erin Collins, NTA Blog. "Every day, TAS employees help people who have been having issues with the IRS. For example, a taxpayer may be facing eviction from their home or repossession of their vehicle, or in need of a refund to make payroll for its small business, all of which can cascade to create additional problems. TAS helps many taxpayers stay in their homes or keep their cars, and helps small businesses while trying to resolve their issues with the IRS. TAS also recommends changes to the IRS and Congress to improve and strengthen tax administration. TAS employees focus on taxpayer service and protecting taxpayer rights."
Tax Compliance for Refugees: Free Training Aims to Fill Gap in Tax Assistance - Christine Speidel, Procedurally Taxing. "The unmet need for competent, free assistance with first-year returns has been clear for many years."
Economic Well-Being Improved in 2021, But Will It Continue? - Elaine Maag, TaxVox. "Extending the CTC now could help put families back on the path of financial security they were on at the end of 2021."
‘Chrisley Knows Best’ reality TV stars convicted of fraud, tax evasion - Jaclyn Peiser, Washington Post ($).
It seems a lot of unhappy tax cases involve a pattern of not filing. That draws IRS attention - especially when you have significant income that is generating 1099s.
Todd and Julie, along with their accountant, began conspiring to defraud the IRS after the family started earning millions from their reality show, prosecutors said. Owing hundreds of thousands of dollars to the IRS for his 2009 taxes, Todd opened a corporate account in Julie’s name called 7C’s Productions. Millions of dollars were deposited into the account to protect Todd from having to pay the money he owed the government, according to court records.
The couple did not file taxes from 2013 to 2016, according to prosecutors. In 2015 and 2016, [Their tax preparer] filed tax returns “omitting all information about 7C’s Productions’ revenue and distributions,” court documents say, which implied that the company had not turned a profit those years.
Quack. It's National Donald Duck Day! But Donald is too big to be contained in one country. Donald is huge in Finland. "Donald Duck rose to cultural icon status in the Nordic country as the star of his very own weekly comic book magazine, Aku Ankka (Donald Duck in Finnish)... As a result, generations of Finnish children have learned to read with Aku Ankka..."
This is a roundup of tax news and opinion. Any opinions expressed or implied are those of the author and not necessarily those of Eide Bailly. Opinions found in linked items are those of the authors of the linked item, not of your bloggers or of Eide Bailly. “$” means link may be behind a paywall. Items here do not constitute tax advice.